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on International Trade |
| By: | Carlos Antonio Rozo (Universidad Autonoma Metropolitana Xochimilco Campus) |
| Abstract: | International Institute of social and Economic Sciences and Faculty of Economics, University of West Bohemia33r International Academic Conference, ViennaAugust 28 ? 31 2017AbstractThe Mexican automotive industry in the global value chainsCarlos A. Rozo, senior professor of International EconomicsUniversidad Autónoma Metropolitana- Xochimilco CampusCiudad de México, Méxicorozo@correo.xoc.uam.mxDuring the 1980s, Mexico brought to an end its model of closed economy that oriented its productive system to supplying its internal market within a low level of interconnectivity with foreign markets. The transit to an open economy, inserted in the synergy of international connectivity, concluded with the signing of North American Free Trade Agreement (NAFTA) in 1993. In this process of openness and of structural transformation, the automotive industry (AI) was to become the engine for wider industrialization due to the high levels of foreign investment and the switch of production for export into the global automobile value chains. The Mexican AI, as part of this strategy of global organization and production, has been a very profitable success for the leading U.S. and European transnational automotive corporations. By moving their productive capacity to Mexico these auto OEMs have gain in efficiency and competitivity by reducing their costs and shipping most of their production to the higher priced auto consumer market of the US. The impact of this strategy on the development of the Mexican economy is less evident due to the low level of local value added generated by this industry. Production for export depend largely on imported inputs have minimized forward and backward linkages of this sector with the rest of the Mexican economy. Furthermore, the high degree of this industry´s robotization and technological orientation creates serious limitation in the demand for labor. This paper shows that these contradictory results question the validity of the extreme dependence of Mexico on GVC to develop a more dynamic and inclusive internal market with dubious implications for Mexican economic development and welfare enhancement. |
| Keywords: | Automotive industry, Economic integration, Economic development, Multinational firms, Global Value Chains. |
| JEL: | F14 F23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5808093&r=int |
| By: | Mankan M. Koné; Carl Gaigné; Lota Dabio Tamini |
| Abstract: | This paper aimed to extend previous real option models to features of multinational firms' activities such as market competition and trade barriers. Few researchers have studied multinationals' optimal switching time from export to FDI using real options, and those who have done so have ignored trade policies and strategic interactions between firms. Yet, the presence of local competitors and trade costs influences the option value of waiting. We finnd that FDI in host countries with uncertain demand, strong competition and few barriers to trade will likely to be delayed with respect to immediate investment. In terms of policy implications, we nd that the trade and competition policies of host countries have lower deterrent e ffects on FDI when uncertainty is reduced. |
| Keywords: | Foreign Direct Investment,Imperfect Competition,Trade Liberalization,Real Options, |
| JEL: | F23 D21 |
| Date: | 2017–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2017s-23&r=int |
| By: | Khobai, Hlalefang; Mavikela, Nomahlubi |
| Abstract: | The Ricardian-Heckscher-Ohlin trade model drawn from Solow's (1957) model points out that since the country allocates its resources more efficiently after opening up based on its comparative advantages that openness to international trade will bring only a one-time increase in output, therefore having no implications for long-run growth. This led to this study investigating the causal relationship between economic growth and trade openness in Argentina covering the period between 1970 and 2016. Foreign direct investments and capital are incorporated as additional variables to form a multivariate framework. The findings from the ARDL bounds test validated the existence of a long run relationship between economic growth, trade openness, foreign direct investment and capital in Argentina. The results further indicated that there is a long run causality flowing from trade openness, foreign direct investment and capital to economic growth. These results presents a fresh perspective to trade policy makers in Argentina |
| Keywords: | Trade Openness; Economic growth; ARDL; VECM; Argentina |
| JEL: | F1 F13 F14 F16 F18 |
| Date: | 2017–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82463&r=int |
| By: | Miriam Camarero (Jaume I University. Department of Economics, Av. de Vicent Sos Baynat s/n, E-12071 Castellón, Spain); Estrella Gómez-Herrera (University of Granada. Department of Economics, Av. del Hospicio s/n, E-18010 Granada, Spain); Cecilio Tamarit (University of Valencia, INTECO Joint Research Unit. Department of Applied Economics II. PO Box 22.006 - E-46071 Valencia, Spain) |
| Abstract: | In this paper we analyse the effect that the euro has had on trade using a gravity model for 26 OECD countries and covering the period 2002-2013. Our gravity specification includes time-varying fixed effects, correcting any possible bias that may arise from multilateral resistance variables or unobserved time-varying heterogeneity. Additionally, we explore the potential complementarity or substitution relationship between FDI and trade by including FDI inward and outward stocks in the specification. The time period in the dataset covers the creation and evolution of the European Monetary Union (EMU), starting from the introduction of notes and coins and including the recent economic crisis. Overall, our results show a positive effect of the EMU on trade and reveal the existence of a complementary relationship between trade and FDI. |
| Keywords: | FDI, trade, euro effect |
| JEL: | F10 F15 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1709&r=int |
| By: | Roberto Venturini (Compass Lexecon); Manuel García-Santana (UPF); Laura Puccio (European University Institute and Université Libre de Bruxelles (ECARES)); Paola Conconi (Universite Libre de Bruxelles (ECARES)) |
| Abstract: | Recent decades have witnessed a surge of trade in intermediate goods and a pro- liferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. In this paper, we show that the sourcing restrictions embedded in RoO greatly distort trade in intermediaries. We focus on the North Ameri- can Free Trade Agreement (NAFTA), the world’s largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO. Using a difference-in-differences approach, we find that RoO on final goods led to a sizeable reduction in the growth rate of imports of intermediate goods from third countries. Even if external tariffs are unchanged, FTAs may thus violate multilateral trade rules, by substantially increasing the level of protection faced by non-members. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:1017&r=int |
| By: | Anna Gumpert; Andreas Moxnes; Natalia Ramondo; Felix Tintelnot |
| Abstract: | This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE activities in the model produces life-cycle patterns for exporters that differ from those in an export-only model. Calibrating our model to rich firm-level data from France and Norway, our main quantitative finding is that a reduction in trade costs triggers much larger responses in growth rates and exit rates, for young exporters, in the model with MNEs than in the model without MNEs. We also show that the model is largely consistent with a set of new facts on the joint life-cycle dynamic behavior of exporters and MNEs. |
| JEL: | F1 F23 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24013&r=int |
| By: | Mankan M. Koné; Carl Gaigné; Lota Dabio Tamini |
| Abstract: | We investigate whether and to what extent agricultural uncertainty drives the location of capital in the food processing industry. We show that when a risk-neutral food company has the possibility of exercising market power as both seller and buyer, the impact of agricultural uncertainty on the decision of producing abroad depends on whether the multinational makes the pricing/production decision before or after uncertainty is revealed. An econometric study is then needed to identify the mechanisms at work. The theoretical implications are tested by using a gravity model on European countries' and the United States' outward FDI stock, detailed by destination country in the agri-food industry. Overall, our results suggest that a higher agricultural volatility in the home country triggers investments abroad and that a host country exhibiting low agricultural uncertainty attracts relatively more foreign capital. Moreover, international di erences in agricultural uncertainty generate incentives for vertical disintegration by food companies, especially when trade costs are suciently low. |
| Keywords: | Multinational firm,Uncertain input supply,Vertical fragmentation,Trade costs, |
| JEL: | F23 Q13 L23 L66 |
| Date: | 2017–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2017s-22&r=int |
| By: | Céline CARRERE (University of Geneva); Marcelo OLARREAGA (University of Geneva); Damian RAESS (University of Bern) |
| Abstract: | We explore the impact on bilateral trade flows of the inclusion of a labor clause (LC) in Trade Agreements (TAs). Using a gravity type framework, we find that the introduction of LCs has on average no impact on bilateral trade flows. However, there is some interesting heterogeneity. Exports of low-income countries benefit from the introduction of LCs in North-South trade agreements. Interestingly, the impact is stronger when accompanied by deep cooperation. On the other hand, stronger enforcement mechanisms, at best, marginally reinforce the impact of LCs. The results are clearly inconsistent with the idea that LC are set for protectionist reasons, casting doubt on the reluctance by low-income countries to include labor clauses in their trade agreements. Key Words: Labor Clause, Free Trade Agreements, Gravity Equation |
| Keywords: | Labor Clause, Free Trade Agreements, Gravity Equation |
| JEL: | F16 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3960&r=int |
| By: | Sofia Torreggiani; Giuseppe Mangioni; Michael J. Puma; Giorgio Fagiolo |
| Abstract: | Achieving international food security requires improved understanding of how international trade networks connect countries around the world through the import-export flows of food commodities. The properties of food trade networks are still poorly documented, especially from a multi-network perspective. In particular, nothing is known about the community structure of food networks, which is key to understanding how major disruptions or "shocks" would impact the global food system. Here we find that the individual layers of this network have densely connected trading groups, a consistent characteristic over the period 2001 to 2011. We also fit econometric models to identify social, economic and geographic factors explaining the probability that any two countries are co-present in the same community. Our estimates indicate that the probability of country pairs belonging to the same food trade community depends more on geopolitical and economic factors - such as geographical proximity and trade agreements co-membership - than on country economic size and/or income. This is in sharp contrast with what we know about bilateral-trade determinants and suggests that food country communities behave in ways that can be very different from their non-food counterparts. |
| Keywords: | Food security, international trade, complex networks, communitystructure detection, multi-layer networks |
| Date: | 2017–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2017/29&r=int |
| By: | Paulo Bastos (Development Research Group, World Bank); Daniel A. Dias (Board of Governors of the Federal Reserve System, International Finance Division, Washington DC); Olga A. Timoshenko (The George Washington University, Department of Economics and The Elliott School of International A airs) |
| Abstract: | We document new facts about the evolution of rm performance and prices in international markets, and propose a theory of rm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, we nd that: (1)firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) older exporters tend to use more expensive inputs; (3) the volatility of output and input prices tends to decline with export experience; and (4) input prices and quantities tend to increase with revenue growth within rms. We develop a model of endogenous input and output quality choices in a learning environment that is able to account for these patterns. Counterfactual simulations reveal that minimum quality standards on traded goods reduce welfare by lowering entry in export markets and reallocating resources from old and large towards young and small rms. |
| Keywords: | Learning about demand, prices, product quality, firm dynamics, quality standards |
| JEL: | F12 F14 L11 O14 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0086&r=int |
| By: | Federico Esposito (Tufts University); Costas Arkolakis (Yale University); Rodrigo Adao (Princeton University) |
| Abstract: | Recent empirical evidence documents that international trade shocks have substantial effects on employment across regional labor markets – see e.g., Autor, Dorn and Hanson (2013), and Dix-Carneiro and Kovak (2016). Despite this evidence, general equilibrium trade models have hitherto overlooked the welfare consequences of endogenous response of labor supply following a trade liberalization. In this paper, we propose a novel framework to investigate the local and aggregate impacts of trade cost shocks on employment and real wages. We consider a standard gravity model featuring endogenous local labor supply and local agglomeration forces. In this environment, we show that the interaction between these two ingredients amplifies the welfare effects of international trade shocks, with the amplification channel magnitude given by the elasticity of local employment to the local domestic trade share. Starting from any initial equilibrium, we establish that the response in local and aggregate employment to international trade shock can be computed with knowledge of this elasticity and usual measures of the trade elasticity and the labor supply elasticity. Intuitively, as in standard gravity models, the domestic trade share is a sufficient statistic for the world demand for labor in a local market, but its effect on welfare is no longer determined solely by the response of bilateral trade flows to bilateral trade cost shocks. Instead, the initial local impact of an international trade shock on the real wage induces a local response in employment that further affects real wages through local agglomeration forces arising, for example, from endogenous firm entry or productivity spillovers. We then propose a novel methodology to estimate the central elasticity in our model using a sample of local labor markets. We construct moment conditions that combine regional data on employment and domestic trade share with changes in regional domestic trade share predicted by our general equilibrium model following observable trade cost shocks in foreign countries. Specifically, we obtain regional shifters of the domestic trade shares using the methodology in Dekle et al. (2008) to compute counterfactual changes in the world trade equilibrium implied by bilateral trade cost shocks. Our methodology has several advantages. First, the model-implied instrument relies on standard forces in gravity models: the region's direct and indirect exposure to trade cost shocks through the world trade network. Second, the moment conditions clearly delineate the main exogeneity assumption required for identification: regional labor supply and productivity shocks are mean-independent from foreign trade cost shocks and the initial trade network. Third, our approach yields a new over-identification test for the validity of the general equilibrium channels in the model that uses moment conditions constructed from shocks in different foreign countries. The intuition behind the empirical strategy is more general than our benchmark framework, and it can be applied in a wide classes of international trade models. Finally, we apply our methodology to evaluate the impact of the recent integration of China to the world equilibrium on employment across US states. To this end, we create a trade matrix including US states and foreign countries between 1997 and 2012. Using actual changes in Chinese trade costs, our preliminary results indicate that, across US states, the changes in the domestic trade share predicted by our general equilibrium model are (i) positively correlated with actual changes in the domestic trade share, and (ii) negatively correlated with total employment, labor force participation, and total population. Our structural estimates are suggest the importance of agglomeration forces in the response of local employment to international trade shocks. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:1044&r=int |
| By: | Paulo Bastos (Development Research Group, World Bank, MC3-303, 1818 H Street NW,Washington DC, 20433, United States); Natália P. Monteiro (Department of Economics/NIPE, University of Minho); Odd Rune Straume (Department of Economics/NIPE, School of Economics and Management, University of Minho and Department of Economics, University of Bergen) |
| Abstract: | We study the effect of foreign takeovers on firm organization. Using a comprehensive data set of Portuguese firms and workers spanning two decades, we find that foreign acquisitions lead to: (1) an expansion in the scale of operations; (2) a higher number of hierarchical layers; and (3) higher wage inequality between the top and bottom layers. These results accord with a theory of knowledge-based hierarchies in which foreign takeovers lead to improved productivity, higher demand, or reduced internal communication costs, and thereby induce the acquired firms to reorganize. Evidence from auxiliary survey data reveals that acquired firms are more likely to use information technologies that reduce internal communication costs. |
| Keywords: | Foreign direct investment, internal organization, wage inequality, information technologies |
| JEL: | D24 E23 F23 M10 M16 O30 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0085&r=int |
| By: | Michael Sposi (Federal Reserve Bank of Dallas); Ana Maria Santacreu (St. Louis Fed); B Ravikumar (Federal Reserve Bank of St Louis) |
| Abstract: | We compute welfare gains from trade in a dynamic, multicountry model with capital accumulation. We examine transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization. Both the relative price of investment and the investment rate respond to changes in trade frictions. Relative to a static model, the dynamic welfare gains in a model with balanced trade are three times as large. The gains including transition are 60 percent of those computed by comparing only steady states. Trade imbalances have negligible effects on the cross-country distribution of dynamic gains. However, relative to the balanced-trade model, small, less-developed countries accrue the gains faster in a model with trade imbalances by running trade deficits in the short run but have lower consumption in the long-run. In both models most of the dynamic gains are driven by capital accumulation. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:915&r=int |
| By: | Tom Coupe (University of Canterbury); Oleksandr Shepotylo |
| Abstract: | Using quasi-experimental data, a survey that was held immediately before and after the November 8th, 2016 USA elections, we analyse the impact of reputation on trade policy preference and find that the unexpected election of Donald Trump as 45th president of the USA had a sizeable negative effect on the reputation of the USA in Europe, as measured by the expectations of EU citizens about the future evolution of the USA. But this negative reputational shock seems to have affected in a positive (though not always significant) way the support for future economic cooperation with the USA, as measured by the support of EU citizens for a free trade and investment treaty with the USA. This provides some support for the idea that reputation and formal institutions are substitutes. |
| Keywords: | Reputation, Trade agreements, Trump, TTIP |
| JEL: | F14 F55 C26 F50 |
| Date: | 2017–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:17/08&r=int |
| By: | Olivier CADOT (Faculté des hautes études commerciales - Université de Lausanne); Lili Yan ING (FERDI) |
| Abstract: | To obtain country specific estimates of ad-valorem equivalent (AVE) of Non-Tariff Measures (NTMs), we propose a a new that relies on the estimation of bilateral trade flows on two-way panels (product X importer X exporter) at the HS 2-digit level with importer, exporter and product fixed effects and interaction terms between NTM variables and full vector of country-specific characters. Our results show that AVEs for TBT measures on manufactured products, both for ASEAN countries and the sample as a whole, at 4.5 percent and 5 percent, respectively. As for SPS measures on agriculture and food products, tariff AVEsfor ASEAN countries and the sample as a whole 6.5 percent and 6.7 percent, respectively. However, it should be noted that AVEs can mean very different things depending on whether they have a counterpart in the correction of a market failure. This depends on the technical capabilities of domestic regulatory agencies. |
| Keywords: | Non-tariff measures |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:4018&r=int |
| By: | Johansson, Anders C. (Stockholm China Economic Research Institute); Liu, Dan (Shanghai University of Finance and Economics); Zhen, Maosheng (Shanghai University of Finance and Economics) |
| Abstract: | In this paper we examine the impact of foreign direct investment (FDI) on local urban wage inequality in China. We find that the within-city college premium is larger for cities characterized by a higher degree of FDI penetration. We then try to establish the causal impact of FDI penetration on city inequality using historical Christian influence as an instrumental variable. In addition, firm-level evidence shows that FDI has amplified both between-firm inequality and within-firm inequality. FDI firms do not only hire relatively more high-skilled workers but also provide relatively higher wages to high-skilled workers compared to domestic firms. Finally, an individual-level analysis shows that FDI has a spillover effect on low-skilled workers, but the magnitude of that effect is much smaller than the effect on high-skilled workers. |
| Keywords: | foreign direct investment; skill premium; inequality; China |
| JEL: | F21 I30 R11 |
| Date: | 2017–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hascer:2017-045&r=int |
| By: | Carter Mix (University of Rochester); George Alessandria (University of Rochester) |
| Abstract: | Since 2012, global trade growth has slowed significantly relative to both its historical trend and output growth. There is some debate around whether this slowdown is due to cyclical or structural factors. The answer to this question has important implications for future trade growth. We develop a dynamic quantitative two-country model in which trade responds gradually to changes in trade costs. We capture cyclical and structural factors with movements in productivity and trade costs. We use Bayesian estimation to match the model with time series from the data. We then compute the contributions of cyclical and structural factors on the slowdown. Our model also offers insights on how changes in productivity and trade costs affect trade and output in different ways. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:907&r=int |
| By: | Olivier Cadot; Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | ASEAN's rules of origin (ROO) have a simple and transparent structure, with a large chunk of trade flows subject to a 40% regional value content or a change of tariff classification. The econometric analysis of trade flows discovers that the average ad-valorem equivalent (AVE) of ASEAN's ROO is 3.40% across all instruments and sectors. The trade-weighted average is 2.09%. This moderate estimate is in line with the existing literature. However, we also find fairly high AVEs for some sectors including leather, textile and apparel, footwear, and automobiles. We also find that some rules appear more restrictive than others; in this regard, the Textile Rule seems to stand out as a relatively more trade-inhibiting rule than others. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:pb-2017-04&r=int |
| By: | Jaime DE MELO (Ferdi); Marcelo OLARREAGA (Université de Genève) |
| Abstract: | The paper focuses on the role played by Trade Related Institutions (TRIs) in shaping trade flows and their development impact in low-income countries and how these TRIs are shaped by international trade. Three types of TRIs are examined: i) trade agreements; ii) trade promotion organizations; and iii) private TRIs, i.e. fair trade labelling, trading platforms and reputation mechanisms. Recent research reviewed for each type of TRI is then followed by suggestions for further work. |
| Keywords: | Trade related institutions, Development |
| JEL: | F13 O19 O24 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3954&r=int |
| By: | Céline CARRERE (Université de Genève); Maria MASOOD (Université de Genève) |
| Abstract: | While the significant influence of cultural proximity on bilateral trade flows has been extensively documented in the literature, its possible role in times of crisis has not yet been raised. Relying on a panel estimation of a gravity model incorporating cultural proximity parameters, we evidence the existence of a significant surge in the impact of the different components of cultural proximity during economic recession. The trade resilience among countries sharing a cultural bond is not a pure composition effect as it also appears within product categories. To understand this unexpected effect, we discuss different mechanisms that emphasize the potential mitigating influence of cultural proximity on some determinants of the trade collapse, namely the uncertainty shock, the increased moral hazard and the emergence of ethnocentric preferences. |
| Keywords: | Bilateral trade, cultural proximity, financial crisis, trade resilience |
| JEL: | F10 F14 Z10 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3971&r=int |
| By: | Céline CARRERE (University of Geneva); Maria MASOOD (University of Geneva) |
| Abstract: | While the significant influence of cultural proximity on bilateral trade flows has been extensively documented in the literature, its possible role in times of crisis has not yet been raised. Relying on a panel estimation of a gravity model incorporating cultural proximity parameters, we evidence the existence of a significant surge in the impact of the different components of cultural proximity during economic recession. The trade resilience among countries sharing a cultural bond is not a pure composition effect as it also appears within product categories. To understand this unexpected effect, we discuss different mechanisms that emphasize the potential mitigating influence of cultural proximity on some determinants of the trade collapse, namely the uncertainty shock, the increased moral hazard and the emergence of ethnocentric preferences. |
| Keywords: | Bilateral trade, cultural proximity, financial crisis, trade resilience |
| JEL: | F10 F14 Z10 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3972&r=int |
| By: | Mari Pangestu; Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | This brief explains the motivation behind ASEAN's integration into East Asia, the role ASEAN reforms play in the integration, as well as its future direction. If ASEAN members continue to improve trade facilitation and regulation transparency, regional integration can become a vehicle for multilateral integration, domestic reforms, and institution building. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:pb-2017-05&r=int |
| By: | Dhingra, Swati; Machin, Stephen; Overman, Henry G. |
| Abstract: | This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are developed from a structural trade model. Average effects are predicted to be negative under both scenarios, and to be more negative under hard Brexit. The spatial variation in negative shocks across areas is higher in the latter case as some local areas are particularly specialised in sectors that are predicted to be badly hit by hard Brexit. Areas in the South of England, and urban areas, are harder hit by Brexit under both scenarios. Again, this pattern is explained by sector specialisation. Finally, the areas that were most likely to vote remain are those that are predicted to be most negatively impacted by Brexit. |
| Keywords: | Brexit; EU and UK; local economic impacts; trade models |
| JEL: | J1 |
| Date: | 2017–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:85602&r=int |
| By: | Chan-Guk Huh (Chungnam National University, International Trade Department) |
| Abstract: | This study analyzes productivity enhancing effects of privatizations as well as corporate sector restructuring involving foreign owned enterprises (FOE) in China using firm level data from 1998 to 2007 period. First, we examine key characteristics of firm level total factor productivities (TFPs) using a non-parametric multi-factor productivity approach and, then we decompose TFP growth by ownership categories using the dynamic Olley-Pakes method, paying special attention to the role of FOEs in this area. Second, this study measures spillover effects of FOEs on TFP of overall industries and finds that the FOE sector not to have had the backward spillover effects, which operate through sourcing of intermediate parts from local firms. However, this result is reversed when we re-examine the relationship using a truncated FOE group, which consists of firms that have been converted into FOEs from being local Chinese firms through foreign direct investments. This suggests that the lack of knowledge of local supply chain networks by original FOEs might have contributed to the earlier finding of an absence of the backward spillover effect of FOEs on local firms. In addition, this study finds shuffling of firms between the two categories of FOEs of HMT and FDI to have had measurable TFP enhancing effects. |
| Keywords: | Total Factor Productivity, FDI, China, privatization |
| JEL: | F21 F23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5808249&r=int |
| By: | Han Eol Ryu (Korea Institute for Industrial Economics and Trade) |
| Abstract: | This paper examines the economic effects of harmonizing standards between technologically asymmetric countries, and the optimal harmonization policies. It sets up a simple three-firm, three-country model in which each country adopts different standards. The difference in standards incurs conversion costs to each firm for the foreign market access and harmonization through the FTA TBT agreement removes such costs between member countries. The paper shows that harmonization of standards with the technologically more or less advanced country always increases the consumer surplus and the social welfare. In addition, the producer surplus will increase if the harmonization partner country has a higher technology level while it may decrease if the partner has a lower technology level. The paper also shows that if most of the domestic exporting goods are in the sectors with high conversion costs, harmonizing standards with the technologically more advanced country is prioritized. If they are in the sectors with low conversion costs, harmonizing with the less advanced country is prioritized. Such strategies, moreover, should be emphasized under a higher technology asymmetry among the countries. |
| Keywords: | Standards, Harmonization, Technology Asymmetry, Technical Barriers to Trade |
| JEL: | F12 F13 L50 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5808146&r=int |
| By: | Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)); Olivier Cadot; Janine Walz |
| Abstract: | The growing literature on trade has proven that transparency has positive effects on trade and investment. This is particularly important in non-tariff measures, which are often criticized for their lack of transparency and their hidden protectionism. Through a combination of off-the-shelf data and an experiment, a new index of transparency shows that the Association of Southeast Asian Nations (ASEAN) score well compared to other developing countries. Singapore is ranked the highest among ASEAN countries and 12th in the world. The other ASEAN countries - Indonesia, Lao PDR, Thailand, and Brunei Darussalam - are among the top 50 in the world. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:pb-2017-06&r=int |
| By: | Olivier Cadot; Ernawati Munadi; Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | Dealing with NTMs as if dealing with a trade tool like tariffs is an unproper approach, as NTMs could play a role of check and balance for quality of goods. To improve NTMs, efforts should be packaged as part of government regulation reform. Two main areas to work on are transparency through collective and uniform data collection as well as setting up an institution for better coordination and more objective evaluation of NTMs. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:pb-2017-03&r=int |
| By: | Begg, Iain |
| Abstract: | The UK’s decision to leave the European Union will have a wide-ranging effect on the British economy, but the scale and sequencing of the likely effects are hard to gauge. The uncertainties surrounding how a country separates itself from a regional economic bloc have posed challenges to the economics profession about how best to analyse the many consequences. The paper discusses the main lines of relevant economic argumentation, and reviews the evidence from studies of the likely effects of “Brexit”. It then considers how the UK’s economic linkages with the EU might evolve and examines some of the ensuing political economy challenges. The concluding section ponders the role of economists in so contentious a political development. |
| JEL: | N0 |
| Date: | 2017–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:83587&r=int |